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Citi, Wells and JPMorgan Chase have all taken substantial chargeoffs in response to new OCC guidance on treatment of home-equity loans, and several other large and regional banks are likely to do the same.
October 15
An increase in mortgage banking revenue contributed to an increase in third-quarter earnings at BOK Financial (BOKF) in Tulsa, Okla.
The $27.1 billion-asset company’s earnings rose almost 3% from a year earlier, to $87.4 million. Its $1.27 earnings per share beat an estimate from analysts polled by Bloomberg by 7 cents.
Total fees and commissions rose nearly 14% from a year earlier, to $166.3 million. Mortgage banking revenue increased 70% from a year earlier, to $50.3 million, though transaction card revenue fell 11%, to $27.8 million.
“BOK Financial's strong financial results for the third quarter continue to reflect the strength of our diversified revenue business model,” Stan Lybarger, the company’s president and chief executive, said in a press release. “The prolonged low interest rate environment has enabled our mortgage banking professionals to assist a record number of customers in the purchase or refinance of their home. We experienced strong commercial loan growth and continued growth in our deposit base.”
Net interest revenue remained relatively flat from a year earlier, at $176 million. Total loans increased 6% from a year earlier, to $11.8 billion. Compared to the third quarter of 2011, commercial loans rose 13%, to $7.3 billion, and residential mortgage loans rose more than 3%, to $2 billion. Other consumer loans fell 22% from a year earlier, to $374.6 million, and commercial real estate loans fell almost 5%, $2.2 billion.
Interest expense fell almost 34% from a year earlier, to $20 million. Other operating expenses rose almost 1% from a year earlier, to $222.3 million, as personnel costs rose almost 19%, to $122.8 million.
During the third quarter, BOK
BOK said that it expects to implement in the fourth quarter recent guidance from the Office of the Comptroller of the Currency regarding borrowers who have filed for Chapter 7 bankruptcy. Even if loans are still performing, banks must move loans where the borrower has filed for bankruptcy to nonaccrual status. BOK said it had generally been complying with the guidance by charging down such loans to collateral value within 60 days of being notified of the borrower’s bankruptcy filing.
The company did not expect the moves to significantly influence chargeoffs or loan-loss provision, though it said that nonaccruing loans and troubled debt restructuring may increase by $10 million to $15 million. In the third quarter, nonaccruing loans fell more than 42% from a year earlier, to $131.9 million.
